* European shares dip, Wall St set to open lower
* French bonds underperform after Le Pen campaign launch
* Oil up on concern over extension of Iran sanctions
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Nigel Stephenson
LONDON, Feb 6 The dollar edged higher on Monday
but European stocks fell as investors sought clarity in the face
of a host of economic and political uncertainties.
Wall Street looked set to open lower at the beginning of a
heavy week of corporate earnings in Europe and the United
In the currency market, the question was how Friday's U.S.
labour market data will affect the pace of Federal Reserve
interest rate rises. Far more jobs were added last month than
expected, though hourly wages barely budged.
Oil prices rose after new U.S. sanctions were imposed on
Iran on Friday over its missile programme.
French government bonds meanwhile underperformed German
benchmarks, with the gap in yields its widest in four years
after French far-right party leader Marine Le Pen launched her
bid for the presidency with a vow to fight deregulated
globalisation and to take France out of the euro.
The single currency fell more than half a percent on risks
linked with the French election to be held in April and May.
But there was no overarching theme to Monday's market moves,
highlighting how correlations between financial market assets
have broken down in recent months as investors sense the era of
ultra-loose monetary policy may be winding up.
"There is a sense of general uncertainty and I'm not sure if
you can pin-point it to anything in particular," said Orlando
Green, European fixed income strategist at Credit Agricole.
"You could say markets are a bit edgy about the political
scene in Europe, the political scene in the U.S. and there's a
bit of uncertainty about when the Fed will hike rates next."
The pan-European STOXX 600 index were all but flat,
giving up earlier gains, with banking stocks,
particularly in Italy, weighing on the index.
Shares in Italy's UniCredit fell 3.7 percent on
the first day of the bank's $13 billion euro cash call.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.6 percent.
Japan's Nikkei rose 0.2 percent, with banks rising
after U.S. President Donald Trump signed an executive order to
scale back regulations in the financial industry that were
implemented after the financial crisis nearly a decade ago.
Trump meets Japanese Prime Minister Shinzo Abe on Feb. 10
and 11, with trade and currencies likely to be on the agenda.
China's CSI 300 stocks index rose 0.3 percent,
though investors were cautious after the central bank
unexpectedly raised short-term interest rates on Friday.
In debt markets, French 10-year government bond yields
rose 2 basis points to 1.1 percent. German
equivalents, the euro zone benchmark, fell 4 bps to a two-week
low of about 0.38 percent, pushing the gap between the two to
its widest in four years.
"Le Pen winning is unlikely, but the situation in France is
certainly raising fears among investors," said DZ Bank rates
strategist Christian Lenk. "French bonds will continue to
underperform even though a lot is priced into the market."
The Italian 10-year yield gap over Germany widened to 200
bps, a level not seen since October 2014.
The euro weakened 0.6 percent to $1.0721 while the
yen gained 0.4 percent to 112.23 per dollar and sterling
dipped 0.1 percent to $1.2450.
The dollar rose 0.2 percent against a basket of major
currencies. Data on Friday showed average hourly earnings rose
just 0.1 percent, suggesting any inflation pick-up would be
This led some analysts to conclude the Fed would be in no
hurry to raise interest rates.
Currency investors are also awaiting details on expected
pro-dollar tax and spending initiatives pledged by Trump.
Oil reversed an earlier rise as signs of higher U.S. output
offset concern about any extension of new U.S. sanctions imposed
on major oil producer Iran.
Brent crude, the international benchmark, rose 9 cents a
barrel to $56.92.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Wayne Cole in Sydney, Dhara Ranasinghe
in London; Editing by Catherine Evans)